15 First Avenue:Features: 809m2 site, 2-level 456m2 office building leased to First Mortgage Managers for 6 years from October 2015 with 2 4-year rights of renewalRent: $118,919/year net + gstOutcome: sold for $2.205 million at a 5.4% yieldAgents: Brendon & Lynn Bradley

10A Mitchell St:Features: dwelling converted for commercial use with 8-year lease to Pathlab BOPOutcome: sold for $455,000 at a 5.9% yieldAgents: Brendon & Lynn Bradley

53 Spring St (pictured):Features: 877m2 central business district site, 1172m2 3-level building developed in the late 1980s, basement parking for 13 cars, 2 commercial levels above; holding income from lease to ANZ Bank, which has recently vacatedRent: $254,364/year until JulyOutcome: sold for $3.8 million at a 6.7% yieldAgents: Brendon & Lynn Bradley

A Browns Bay beachfront property (pictured) was sold at Colliers’ auction yesterday at a 4% yield on passing rent (one vacancy), 4.6% on potential. It has 12 tenants in 3 buildings running through from Clyde Rd to the beachfront reserve.

The one other property to sell under the hammer, in Hamilton’s cbd, sold at a 6.2% yield. A third property, an office unit in Mairangi Bay, sold post-auction.

Pengxin, given its performance after buying the Crafar family’s portfolio of 16 farms, and Stevenson Group Ltd, after an extensive marketing campaign before selling Lochinver, were bewildered by an apparent change in Government stance.

Shanghai Pengxin overcame an appeal by iwi & Sir Michael Fay against its Crafar farms purchase on the basis of a Court of Appeal finding that “generic business skills & acumen” held by the directors of the local holding company.

Another subsidiary, Pure 100 Farm Ltd, signed an agreement in July last year to buy the 13,843ha Lochinver Station in the central North Island from the Stevenson Group family for $88 million.

But Mrs Bennett said: “Because Lochinver Station is classified by law as sensitive land, ministers must consider whether the application meets the requirements set out in the Overseas Investment Act.

“While we recognise & support the importance of overseas investment, the Overseas Investment Act states it is a privilege for overseas people to own sensitive New Zealand assets and therefore requires such investments to meet statutory criteria for consent.

“After detailed & careful individual consideration, we are not satisfied there will be, or is likely to be, a substantial benefit to New Zealand – a key requirement for applications of sensitive land of this size.”

The Overseas Investment Office recommended approving the application, saying the question of whether the benefits of the potential investment to New Zealand were or could be substantial & identifiable was finely balanced.

Ms Upston said: “We agreed parts of the proposed investment could benefit New Zealand but, in our judgment on the overall balance of evidence, the benefits are not likely to be substantial & identifiable.

“This proposed sale didn’t pass a test we are required to exercise ministerial judgment on. This is an example of our system working well. The Overseas Investment Office conducted a thorough investigation before making a finely balanced recommendation. Ministers carefully assessed the evidence and ultimately came to a different view.”

The Stevenson family bought its first 5260ha at Lochinver, 32km from Taupo, in 1958 and, from 1961-82 under Sir William Stevenson, 12,500ha of scrubland was converted to productive farming.

Shanghai Pengxin began as a commercial property developer in 1997 and expanded into farming in China, South America & Cambodia and copper mining in the Congo since 2005.

Shanghai Pengxin said the improvements it had made to existing assets were well known: “Pengxin has spent more than $18 million since settlement to improve the productivity & environment of the former Crafar farms to new historical levels. We are surprised & extremely disappointed with the decision and will be considering our options.”

Stevenson Group chief executive Mark Franklin was disappointed by the process & the outcome: “At this stage I am not sure we agree with the assumptions used or the way the criteria has been applied. Certainly the assumptions that have been used do not reflect our reality – we carried out extensive marketing of the farm and the hypothetical New Zealand purchaser did not come out of that process.

“We are concerned that this process has taken 14 months, with the end result that we have been deprived of our property rights to sell to the highest value bidder for some vague national benefit which has not been defined.

“We are unclear as to why this property is different to the many others that have been approved through the Overseas Investment Office process, given the obvious benefits both to the farm and to Stevenson Group.

“Beyond this transaction, this decision will have significant economic ramifications for the New Zealand economy, particularly in the areas of international relations, uncertainty of foreign investment and rural land prices.”

Quest Serviced Apartments (NZ) Ltd will add a new property to its portfolio on Friday when Quest Taupo opens.

The purpose-built property on Kaimanawa St has 38 apartments in a mix of studios & apartments of 1-3 bedrooms and takes the accommodation chain to 36 properties. Franchise directors Shanmu Sundram and her sister, Hema, will manage it.

Quest Taupo is the second of 3 properties the serviced apartment operator is this year. Quest Nelson opened its doors in June and Quest Whangarei is scheduled to open in September.

One property, in Taupo, sold at Colliers International’s commercial auction today, but negotiations were continuing on the other 3. The auction of a fifth property, a warehouse in a Riverhead industrial subdivision, was postponed.

Shanghai Pengxin Group Co Ltd, buyer of the Crafar family’s farm portfolio & majority shareholder in Synlait Farms Ltd, has signed an agreement to buy the 13,843ha Lochinver Station in the central North Island from the Stevenson Group family.

The rural station, 32km from Taupo, was put on the market for the first time in 54 years last December through a Bayleys tender, which closed in February. It has carrying capacity assessed at 105,000 stock units, and was promoted with an expectation that its capacity would soon increase to 120,000 stock units.

Shanghai Pengxin separated Synlait Farms from Synlait Ltd in February to create 2 pure-play investments after Synlait Ltd had an unsuccessful capital-raising. Synlait Ltd now holds 49% of Synlait Milk Ltd, owner of the group’s milk manufacturing assets. At the separation point, Mitsui & Co Ltd sold out of Synlait Farms, ending a 5-year relationship.

The Chinese group plans to secure operational synergies between Lochinver & some of its neighbouring North Island farms. It also secured a 74% stake in 13 South Island farms in March and has committed to capital improvements and implementing innovative industry concepts.

Stevenson Group has been a force in road & infrastructure development for more than a century, supplying aggregates & concrete-based building products and mining & quarry management. The company got approval a year ago to rezone 361ha of rural & quarry land at Drury South for a mix of industrial & business development.

Jackie Harrigan gave the history & current state of Lochinver Station in an article in Young Country magazine last year. Among the points in her story was the strongly growing China connection through regular shipments of Friesian dairy heifers – up to 14,500 shipped out at a time through Napier.

The Stevenson family bought its first 5260ha in 1958 and, from 1961-82 under Sir William Stevenson, 12,500ha of scrubland was converted to productive farming.

Shanghai Pengxin began as a commercial property developer in 1997 and expanded into farming in China, South America & Cambodia and copper mining in the Congo since 2005.

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John Sax of Southpark Corp Ltd has bought the Kinloch golfcourse, with plans for a luxury lodge. The course also has consent for 69 residential sites.

Southpark revealed its purchase yesterday.

Coromandel Investment Trustees Ltd bought the 311ha Kinloch golf resort (apart from some subdivision land) from Hanover Finance Ltd for $26 million in a 2008 mortgagee sale, shortly before the previous owner, Kinloch Golf Resort Ltd, went into liquidation owing $49 million. Coromandel Investment Trustees sold the course to Van den Brink interests last year and the trustee company went into liquidation last July. The van den Brinks put the course back on the market this year.

The Jack Nicklaus-designed course opened in 2007.

Southpark is mainly an industrial property developer, but Mr Sax also owns the Treetops resort near Rotorua and bought Patrick Fontein’s Kensington Park project at Orewa from the receivers in 2009.

The Westpac bank in Taupo’s commercial centre has been sold at auction for $2.695 million, at a yield below 5%.

Gary Harwood, of Bayleys Taupo, said the 544m&sup2; 2-level building, on a 390m&sup2; site at 27-29 Horomatangi St, attracted interest from all over New Zealand, with 8 registered phone bidders & plenty of competition on the auction floor as well.

It was eventually sold to a Christchurch phone bidder after 129 bids were received, at a 4.8% yield on its current net annual rental income of $130,500. Westpac has a 9-year lease until mid-2010, with rights of renewal until 2019.

The sale price was well in excess of the property’s current capital valuation of just over $2.1 million.

Mr Harwood said the sale price showed the strength of a market like Taupo, which has a very compact cbd: “The purchaser was not so much concerned about the initial yield but was focused on the long-term strength of the location, in the heart of Taupo’s retail area, where there is less vacancy risk than in a larger market. It was also a well maintained, easy maintenance building, obviously with a very strong tenant.”

Mr Harwood said there were hardly ever vacant retail outlets in the Taupo cbd: “This has placed pressure on current & prospective tenants wanting to be located in the most frequented areas, who have to pay a premium for it. However, this situation has worked to the advantage of investors in Taupo cbd retail property because it has put pressure on rentals & yields, which has generated capital growth.”

Hanover Finance Ltd said today a sale had been agreed for assets specifically associated with Kinloch Golf Resort Ltd.

Hanover held a secured first mortgage over the Kinloch assets, including the golfcourse and bulk development sites within the project.

Chief executive Bruce Gordon said Kinloch had been sold after a tender process for an undisclosed sum to a local buyer who intended to continue to add value to the development. Hanover sought a mortgagee sale of the assets in May to protect value in the assets for its investors.

Shareholder Peter Yocky, of New Mexico, & Hsiu-Chuan Lee went to court to apply to liquidate Kinloch Golf Resort (William Ormerod, Devonport). The application was set down for hearing on Friday 18 July.

About Bob Dey Property

The Bob Dey Property website is primarily about commercial & development property in Auckland, policies & strategies that impact on the sector, listed property securities and wider economic influences. It examines infrastructure, access & urban design issues, and presents ideas from around the world. The emphasis is on appropriate depth & context.